ACIT, Calicut V. M/s.Kerala Transport Company, Calicut

ITA 353/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68952 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: RADHESH BHATT
• Keywords: Deemed dividend; Tax effect

Judgement Text

1 ITA NO. 352 & 353/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 352 & 353/COCH/2013 (ASSESSMENT YEARS 2007-08 & 2008-09) A.C.I.T., CIR.1(1) VS M/S KERALA TRANSPORT CO. KOZHIKODE KOZHIKODE PAN : AADFK (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. JOHN RESPONDENT BY : SHRI RADHESH BHATT DATE OF HEARING : 14-08-2013 DATE OF PRONOUNCEMENT : 30-08-2013 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE COMMON ORDER PASSED BY THE CIT(A), KOZHIKODE DATED 20-03-2 013 AND PERTAIN TO ASSESSMENT YEARS 2007-08 AND 2008-09. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THEM TO GETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDIT ION OF DEEMED DIVIDEND U/ 2(22)(E) OF THE ACT. 2 ITA NO. 352 & 353/COCH/2013 3. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE ASS ESSEE, A PARTNERSHIP FIRM, RECEIVED FUNDS FROM M/S KTC AUTOMOBILE PVT LT D. THE PARTNERS OF THE ASSESSEE FIRM ARE ALSO SHAREHOLDERS IN THE LENDING COMPANY. THEREFORE, THE ASSESSING OFFICER TREATED THE AMOUNT RECEIVED B Y THE ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HOWEVER, THE CIT(A) DELETED THE ADDITION BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06. ACCORDING TO THE LD.DR, THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THIS TRIBUNAL, IN PRINCIPLE, THOUGH NO APPEAL WAS FILED BEFORE THE HIGH COURT BECAUSE OF L OW TAX EFFECT. THEREFORE, ACCORDING TO THE LD.DR, THIS ISSUE HAS T O BE ADJUDICATED ON MERIT. WE HEARD SHRI RADHESH BHATH, THE LD.REPRESEN TATIVE FOR THE ASSESSEE ALSO. 4. IT IS NOT IN DISPUTE THAT THE BENEFICIAL SHAREHO LDERS OF KTC AUTOMOBILES PVT LTD ARE PARTNERS IN THE ASSESSEE FI RM. THEREFORE, WHEN THE MONEY WAS RECEIVED BY THE FIRM ON BEHALF O THE PARTNERS, THE DEEMED DIVIDEND HAS TO BE ASSESSED ONLY IN THE HANDS OF TH E PARTNERS AND NOT IN THE HANDS OF THE FIRM. THIS IS FOR THE SIMPLE REAS ON THAT THE FIRM IS NOT A SHAREHOLDER IN THE LENDING COMPANY. SINCE THE PART NERS ARE SHAREHOLDERS AND FUNDS WERE GIVEN TO THE PARTNERSHIP FIRM FOR TH E BENEFIT OF THE PARTNERS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DEEMED DIVIDEND U/S 2(22)(E) HAS TO BE ASSESSED ONLY IN THE HANDS OF TH E RESPECTIVE PARTNERS 3 ITA NO. 352 & 353/COCH/2013 AND NOT IN THE HANDS OF THE FIRM. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELE TED THE ADDITION IN THE HANDS OF THE FIRM BY FOLLOWING THE ORDER OF THIS TR IBUNAL. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. 5. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH AUGUST, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 30 TH AUGUST, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH